Indonesia’s urban centers recently underwent an explosion of supermarkets. With cheaper, higher quality commodities and better services, supermarkets have the potential to drive traders in traditional markets out of business. In this paper, we evaluate whether this is indeed the case. We find that traditional traders experienced declines in their business. However, both qualitative and quantitative findings indicate that the main cause of decline is not supermarkets. Instead, traditional markets are plagued with internal problems and face increasingly bitter competition from street vendors. Therefore, the policy recommendations include strengthening traditional traders and seriously tackling the problem of street vendors.

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